is our south african office set up yet....
By Antony Sguazzin and Danielle Rossingh
March 16 (Bloomberg) -- South Africa may spend as much as $800
million in developing an ethanol industry as rising oil prices
prompt the government to look for cheaper sources of motor fuel for
the country's 46.9 million people.
The nation is studying developing eight plants able to make 1.1
billion liters of the fuel, equivalent to a 10th of the country's
gasoline, Rian Coetzee, the head of the agro-industries unit of the
state-owned Industrial Development Corp., said in an interview from
Johannesburg today. It is considering producing the fuel from sugar,
sorghum and corn.
U.S., Brazilian and European companies have been investing in
ethanol plants after crude oil prices gained 83 percent over the
past two years. About 40 percent of South Africa's fuel needs are
met by plants run by Sasol Ltd. and state-owned PetroSA Ltd. that
convert coal and natural gas into products such as diesel. The rest
is met through imports of crude.
``The developments taking place in the ethanol industry are
just as important as the invention of the internet,'' Roland Jansen,
the founder of the $1.9 billion fund-management arm at
Liechtensteinische Landesbank in Vaduz, said in an interview today.
``In five years' time, we will be able to go to any gas station
anywhere in the world, and choose between ethanol, gasoline or
biodiesel.''
More Air
Ethanol is a form of alcohol that, when added to gasoline,
increases its oxygen content, causing the fuel to burn more
completely. The South African plants, each costing $60 million to
$100 million, may use sugar to produce the fuel.
``This is an announcement of a national initiative,'' Coetzee
said, adding that talks had begun with agricultural companies on
building the plants. He declined to identify them.
The study will consider introducing sugar-beet farming to
supply plants in Eastern Cape province. It will also look at sugar
cane production in the eastern KwaZulu-Natal province, where Illovo
Sugar Ltd. and Tongaat Hulett Group Ltd. run plantations. Remgro
Ltd.'s Transvaal Sugar Ltd. also produces sugar in South Africa.
The use of sorghum and corn in other parts of the country will
be considered at a later stage, Coetzee said.
The plan is separate from a 7 billion-rand ($1.2 billion)
project announced on Feb. 23 by Sterling Waterford Holdings Ltd. and
Ethanol Africa Ltd. to build corn-to-ethanol plants in the country.
Cheap Corn
While sugar is easier to convert into ethanol than corn, the
grain is cheaper in South Africa, Philip Bouwer, the managing
director of Sterling, said in an interview from Cape Town.
White sugar prices in London rose to $466.20 a metric ton on
Feb. 3, the highest since 1989 and have gained 68 percent over the
last year. While yellow corn, traded in Johannesburg, has risen 65
percent over the last year to 1,012 rand a ton its record is 1,845
rand on Jan. 28, 2002.
``Corn is the way to go in this country,'' Bouwer said. ``It
doesn't help you if you have high efficiencies if its is going to
cost you.''
Sugar prices may more than double to as much as 40 cents a
pound as demand for ethanol rises, Jansen said.
Companies involved in South Africa's corn industry include
Afgri Ltd. and closely held Senwesbel Ltd. Sterling may ask the IDC
to invest in its projects, Bouwer said.
Sasol, South Africa's largest oil company, said on Feb. 9 that
it's studying a plant to produce diesel from soy beans together with
the energy ministry's Central Energy Fund. The fund is the unit
working with the IDC.
South Africa may eventually be able to export ethanol,
Jansen said.
``The Japanese government is preparing legislation which will
allow for 5 percent ethanol being mixed into gasoline,'' He said.
``Importing ethanol from South Africa will be cheaper for them than
Brazil, because it's nearer.''
--Editor: Griffiths (jwc/ldk).
